Housing prices continue to drop

By Ch.KHALIUN

Housing prices, which have been dropping continuously for nine months, is expected to continue to fall, according to experts.
Tenkhleg Zuuch Company conducted a research and reported that apartment prices in April had decreased by seven percent compared to the same period in 2014. Prices of new apartments are falling slightly, while prices of old apartments dropped drastically since August 2014. Specifically, the price of a new apartment is 2,170,000 MNT per square meter on average, while the average price of an old two-room apartment is 93.3 million MNT.
Master Properties also conducted similar research, which concluded that the price of a new apartment was 2,260,000 MNT per square meter on average. Older two-room apartments were priced at 94.7 million MNT on average.
Some economists say that the decrease of housing price is the burst of the housing bubble in Mongolia.
Head of Tenkhleg Zuuch B.Batzorig said, “Apartment demand and supply was greatly increased in a short period of time. Only in 2013 and 2014, over 30,000 households were involved in the eight percent interest mortgage loan. This was the reason for the increase [in housing demand].”
In the first quarter of 2014, apartment prices were up by 24 percent compared to the same period in 2013. In the second quarter of 2014, the figure was down by 19 percent, in the third quarter, it fell by nine percent, and by the end of 2014, it fell by 0.5 percent from the previous quarter, according to Tenkhleg Zuuch. The company expects housing prices to continue to drop.
Senior researcher of Master Properties N.Batzorig said, “Apartment prices will decrease this year, but the decrease refers mainly to old apartments, because prices of new apartments have fallen only slightly. We estimate that apartment prices will decrease by 1.5 percent per month until the end of 2015.”
Mongolia’s economic growth had decreased to 7.8 percent in 2014, and it fell to 4.4 percent in April 2015. The decrease impacts construction turnover most, according to experts.
Even though the issuance of low-interest mortgage loans and apartments sales are stable, apartment demand has noticeable declined in the last few months.
There are over 320,000 households in Ulaanbaatar, over 130,000 of whom live in apartments. In the last two years, over 30,000 households received mortgage loans.
The government is not issuing low-interest mortgage loans anymore, and stopped providing monetary support to the construction sector, which is expected to reduce demand, according to analysts.
Master Properties reported that over 46,800 properties were available for purchase in the domestic market, as of April. Of the available properties, 46,300 are apartments, and 515 are houses.
Regarding housing price, 53 percent of apartments range from 1.8 million to 2.8 million MNT per square meter, while 29 percent cost less than 1.8 million MNT, and 17 percent cost more than 2.8 million MNT per square meter.
Over 17,000 new properties have been commissioned in recent years, while 29,000 new properties are expected to be commissioned by June.

Rank

Price (per square meter)

One room apartment

Two room apartment

Three room apartment

Four room apartment

Five room apartment

Size (in square meter)

Total price (MNT)

Size (in square meter)

Total price (MNT)

Size (in square meter)

Total price (MNT)

Size (in square meter)

Total price (MNT)

Size (in square meter)

Total price (MNT)

Standard

1.7 million MNT

33.6

59.5 million

49.3

87.4 million

70

124.3 million

82.7

146.4 million

95

170 million

Average

2.3 million MNT

35.2

82 million

51.7

120.5 million

78

182 million

105.4

245.6 million

148.6

346 million

Business

3.7 million MNT

56.5

210.5 million

98

365 million

129.8

483.4 million

203

756 Million

Luxury

6.3 million MNT

92

586 million

130

828 million

166.8

1 billion

226

1.4 billion

Source: Unuudur

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Posted by The UB Post
on May 26 2015. Filed under Community.
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